1 eFX Daily colour

1.1 FX Spot

1.1.1 Overview

(Feb-28) A global selloff in equities, and intensified in Asia, with Asian shares experiencing their largest drop in nearly a month. This was driven by investor caution following President Donald Trump’s new tariffs on Canada, Mexico, and China. The dollar strengthened by 0.72% yesterday to a high of 107.03 and is now trading higher at 107.42.

The markets are concerned that these tariffs could harm US economic growth, increase inflation, and potentially trigger recessions in Mexico and Canada.

In commodities, we see a continued risk-off sentiments:

  • Gold trades at $2864 an ounce, and was down 1.33% yesterday.
  • Oil trades at $73 per barrel, and was up 1.51%% yesterday.

The pressure on ZAR is intensifying, with a break higher than 18.50 likely. Currently we are trading usdzar just below 18.50

Against the crosses:

  • EURZAR trades at 19.1912.
  • GBPZAR trades at 23.2441.

Key events today:

  • SA Trade balance, 14h00 SAST.
  • US PCE inflation, income and spending 15h30 SAST.

1.1.2 US

(Feb-19) President Donald Trump announced plans to impose 25% tariffs on automobile, semiconductor, and pharmaceutical imports, with an announcement expected by April 2. He aims to give companies time to establish US-based operations to avoid tariffs. These new levies could significantly impact industries and lead to higher consumer prices, particularly affecting countries like Mexico, South Korea, Malaysia, and Singapore.

(Feb-24) The Trump administration has taken several actions against China, increasing the risk of worsening ties. President Trump issued a memorandum to curb Chinese investment in strategic American sectors and urged Mexico to levy Chinese imports. The US also proposed fees on Chinese-made commercial ships. These moves led to a drop in Chinese shipping stocks and fluctuations in the CSI 300 Index, while the yuan rose 0.2% against the dollar, now trading at 7.2435.

(Feb-27) President Trump has proposed a 25% tariff on EU imports. The specifics, including which products and sectors will be affected, are still under consideration. No final decisions have been made yet.

(Feb-28) President Donald Trump announced that 25% tariffs on Canada and Mexico are set to be implemented next week[4 March]. Additionally, he plans to impose an additional 10% tax on Chinese imports.


1.1.3 SA

(Feb-24) The Rand remained stable at 18.32 against the $ after a volatile week, initially weakening due to the national budget postponement but recovering with rising global gold prices. The budget delay, caused by disagreements over a proposed VAT increase, is unprecedented and creates uncertainty ahead of the mid-March presentation. Markets are watching for debt consolidation and expenditure cuts in the revised budget.

Over the weekend, we saw a return of load-shedding to stage 6 but Eskom has announced a reduction to stage 4, effective from 00h30 on Monday, February 24th. This decision follows the successful return of most downed units, which has improved the power supply situation.

On the positive side: SA may be eligible to exit the FATF gray list in October, having addressed 20 of 22 items required for delisting. The National Treasury confirmed significant progress in improving the country’s financial security systems, with only two items remaining to be addressed. This progress has been acknowledged by the FATF, which will consider SA’s delisting in its upcoming October review.

1.1.3.1 eFX Volumes

  • Overall volumes

(Feb-19) Saw volumes picking to their highs at the back of the postponement of the budget speech.

(Feb-24) volumes fluctuated around the recent ADV last week, with an uptick on Wed (19-Feb) after budget was postponed to 12 March.

  • Price to volumes

(Feb-21) Rand looks set to trade 18.30 with the latest implied support at 18.05 and before that it was 18.25.

(Feb-24) Clients are happy to be short USDZAR below 18.50, otherwise they are long all the way to 18.85.

  • Liquidity hours across currency pairs
  • Currency positions

(Feb-20) Growing optimism on ZAR, in-fact both importer and exporters happy to trade at these lvls. Both dealing in big tickets.

(Feb-24) Rand opens slightly under pressure today.

(Feb-27) Clients remain net short usdzar. EUR and GBP is favored to USD.

1.1.3.2 USDZAR levels

(Feb-24) Clients are happy to be short USDZAR below 18.50, otherwise they are long all the way to 18.85.

  • ZAR facing negative sentiments after load-sheeding announcement
  • ZAR facing positive sentiments since may be eligible to exit the FATF gray list in October.
  • ZAR volume weighted price has reduced to 18.35.
  • Range for today 18.50 - 18.25. Thus, we remain rand positive.

(Feb-25) All eyes on SA CPI tomorrow. Expecting a relatively quiet day, range still at 18.50 - 18.25.

(Feb-26) SA inflation came inline with expectation with Core CPI MoM at 0.2%. Rand looks stuck at the 18.50 - 18.30 range.

  • We remain ZAR positive, with a range of 18.50 - 18.25 as before.

(Feb-27) Fairly unchanged views on the ZAR, we are still range trading.

(Feb-28) ZAR under pressure from global risk-off sentiments, a break above 18.50 will set a new range at 18.65 - 18.40.


1.1.3.3 USDZAR spreads

(Feb-20) The ZAR seems to now be benefit fitting from a weaker $ environment which is also coupled with Gold hitting all time highs and the confirmation by the President that there won’t we a fallout in the GNU following the budget issue.

(Feb-24) Rand held the 18.35 VWAP lvl and the 18.50 - 18.25 range. Importers are happy to trade at these lvls while exporters are staying on the side-lines.

(Feb-25) SA CPI tomorrow is expected to be a catalyst for the next ZAR move, for now, we have mainly traded at that 18.35.

(Feb-26) Thin market, spreads remained wide for the duration of the day.


1.1.4 Key events this week:

  • Germany CPI, unemployment, Friday
  • Japan Tokyo CPI, industrial production, retail sales, Friday
  • US PCE inflation, income and spending, Friday
  • Chicago Fed President Austan Goolsbee speaks, Friday

1.2 FX Volatility Update

1.2.1 Update

By Thuto Mukena - Institutional Sales Specialist (Feb-28)

  • Overview

Emerging markets came under pressure yesterday as tariff headlines fueled broad USD strength. President Trump reaffirmed that tariffs on Mexico and Canada will proceed next week, citing a lack of effort from neighboring countries to curb drug flows into the US. The ZAR extended its losses, weakening to an intra-session low of R18.3359/$. On the local implied vol front, it was a seesaw session, with the curve lacking a clear directional bias as the market digested tariff developments. However, given the ongoing uncertainty, the 1-week volatility risk premium widened to 7.47%, reflecting heightened demand for protection above average levels.

  • G10 & EM

The market showed little reaction to the US GDP print, which landed in line with expectations at 2.3%. Additionally, jobless claims came in at 242k vs. 221k consensus, with the US dollar still maintaining its bid tone amid the Tariffs noise. After initially pricing out tariff risks due to postponement headlines on Wednesday, the USD/MXN and USD/CAD 1-week implied vols, yesterday reversed course, rising by 147bps and 93bps, respectively, as the market positioned for next week’s anticipated tariffs. The risk-sensitive, AUD/USD 1-week implied vol also edged higher, closing 20bps above open.


1.3 Africa

1.3.1 Update

By sizwe Mfayela - Institutional Sales Specialist (Feb-27)

  • Angola

    • Angola is set to issue up to $4bio of external debt to finance its 2025 fiscal year budget. The nation is seeking to diversify its funding sources by seeking cheaper financing with longer maturities as it plans to issue up to $1bio of debt securities in the Japanese market alongside a $3bio issuance of Eurobonds.
  • Kenya

    • Kenya issued $1.5bio worth of 11-year Eurobonds to lengthen its external debt maturity profile as part of a debt swap due to the buying back of $900mio worth of the 2027 notes. The 11-year bonds were issued at a price of 97.195 (yield 9.95%). The country’s next large debt maturity is the Kenint 28s, with $1bio due in Feb 2028.
  • Mauritius

    • Mauritius has shut down it’s airport as a Class 3 cyclone warning was raised by the country’s meteorological services. The banks and stock exchange will remain closed following yesterday’s public holiday.
  • Nigeria

    • Nigeria’s FX reserves shrunk by $2.2bio from the January 6 highs of $40.92bio.
  • Zimbabwe

    • ZiG Feb MoM inflation cooled to 0.5% vs 10.5% in Dec
  • Eurobonds: +0.125-1.00pts (KENINT outperformance)

    • ANGOL was generally bid, particularly in the front-end bonds. Headline out earlier, – Ver Angola: Angola to issue debt of up to four billion dollars to finance state budget – from which there were lots of questions in relation to. The market shrugged off the headline. Trading needs to get more clarification on “cheapest” and “with a grace period”
    • KENINT flows were light and skewed to buyers of risk, even with the issuance backdrop. Locals, HF and ETF were looking to add while there were small pockets of sellers from RM. New KENINT 36s printed @ 9.95% ytm, with $1.5bln issued.
    • SENEGL finally seeing the curve trade with the market beta but seeing continued selling into strength on the 28s.
    • SOAF had another active session across the curve, trading just shy of $50mm mostly with locals selling front-end. Month-end flows giving a bid to SOAF, with buyers of risk from all client sets in general. The curve closed up 0.25-0.875pts higher (4-8bps tighter, 4bps steeper)

1.3.2 Economic data

Economic data releases